New Look could put itself up for sale as bondholders take control

1989
New Look sale
// New Look could be put up for sale as bondholders take control
// Bondholders to be handed majority ownership as part of debt-for-equity swap
// Debt-for-equity swap part of New Look’s plans to cut debt from £1.35bn to £350m

A corporate note has given rise to speculation that New Look may be forced to itself up for sale in order to complete the debt-for-equity refinancing process it announced last week.

According to The Guardian, which saw the note the fashion retailer sent to bondholders, New Look said that in order to finalise the refinancing, it “may be required to launch a sale process for the group in which other interested parties could participate”.

The refinancing refers to a debt-for-equity swap that New Look intends to pursue as part of a painful restructuring scheme that includes cutting its debt from £1.35 billion to £350 million.

The debt-for-equity deal also entails the fashion retailer will be giving bondholders a significant majority ownership in a bid to cut the debt it owes.

The Guardian reported that in the first phase of the financial restructure, bondholders this week approved an £80 million short-term injection of cash, which New Look will begin to have access to next week.

Bondholders also reportedly approved raising £150 million in further long-term debt as part of the debt-for-equity swap.

However, experts speaking to The Guardian said there was a chance New Look would need to demonstrate there was no better option than the refinancing plan in order to stave off the threat of legal challenges from creditors, especially those holding £176 million in unsecured bonds.

New Look executive chairman Alistair McGeorge told The Guardian that the backing of main lenders was “a vote of confidence in our strategy, the strength of our brand and management’s ability to deliver the wider turnaround plans already being implemented”.

New Look said it expected to finalise its restructure by April.

The retailer announced its debt-for-equity plan after an ambitious overseas expansion plan and poor Christmas trading period failed to improve its financial position amid an ongoing CVA scheme that was launched in March last year.

The CVA has so far led to the closure of 85 stores as well as exits from the Chinese and Belgian markets.

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